Mexico Launches State-Owned Lithium Miner in Nationalization Push

What’s new: Mexico has created a state-owned lithium miner in a bid to increase control over the supply of the key electric-vehicle (EV) battery ingredient.

The state-owned miner can cooperate with private companies, according to a Tuesday government decree. But it does not clarify the impact on the companies chartered to develop the country’s lithium resources, which include Chinese mining giant Ganfeng Lithium Co. Ltd. (002460.SZ). Ganfeng owns a local mine that will produce as much as 22,000 tons of lithium hydroxide per year after construction is finished.

The new company is named Litio para Mexico — Lithium for Mexico — and will begin operations within six months, the decree said.

The context: The Mexican government’s plan to operate its own lithium mining company builds on an April decree ordering the state takeover of exploration, exploitation, and use of the country’s lithium resources.

At the time, Mexican President Andrés Manuel López Obrador ordered a review of all ongoing mining projects, raising questions about Ganfeng’s future in the country.

In May, Ganfeng said the order did not specify potential effects on existing mining projects. The company was in discussions with the local government about various forms of cooperation, it said.

When asked about Ganfeng’s concession at a press conference in June, López Obrador said existing projects would be respected, Nikkei Asia reported.

Last year, Ganfeng announced plans to acquire London-listed Mexican miner Bacanora Lithium Plc. The deal, valued at up to 190 million pounds ($224 million), would give it access to Bacanora’s Sonora project, which is among the world’s largest lithium clay sites. As of April, Ganfeng had completed 90% of the buyout, while the remainder was under legal purchasing procedure.

Related: Chinese Lithium Producer to Buy Out Mexican Sonora Project Owner

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)

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